As expected, Reader’s
Digest Association ended nearly six months of Chapter 11 bankruptcy protection
on July 31, when U.S. Bankruptcy Court gave final approval. The groundwork
had been set on June 28, when the court approved RDA’s restructuring plan
that reduced its debt burden from $500M to $100M. Much of that was
achieved through a debt-to-equity conversion of RDA’s secured notes. This
ends RDA’s second Chapter 11 filing. The first, from Aug. 2009 to Feb. 2010,
lowered the debt from $2.5B to $500M, with some of the individual creditors
(retired employees, etc.) receiving three cents to the dollar. How well the
current creditors (including 2010-2012 Reader’s Digest N.A. president
Dan Lagani)–will be compensated is not known. MIN says it appears that current
RDA president, CEO Robert Guth will remain in charge.
